A strategic game

Raju Elangovan explains the rules of the game when it comes to Standard Essential Patents.

Standard Essential Patents (SEP) are an important subject in the management of Intellectual Property. We witness a web of legal cases, particularly in the telecommunications, ICT and consumer electronics sectors. It appears that no organization is spared by the other. The company “A” files a case against the company “B”, the Company “C” files a case against “A” and the company “B” files a case against “C” alleging infringement of their Standard Essential Patents (SEP). And the cases are further complicated by the invalidity/nullity cases filed by the defendants of these cases against the complainants.

SEPs are a good source of revenue. So, it is not a surprise to see a plethora of legal cases relating to SEPs. The revenue opportunities stem from the “essentiality” of these patents for the standard (See figure 1).

Lack of a standard

There is no universal standard among the SDO’s in qualifying a patent as an essential patent. The process of qualifying and determining a patent as a SEP will depend on many factors, such as the type of Standards Development Organization (SDO), the power, influence and the interest of the members of SDO, the technological solution and the potential commercial opportunities of the technology of the patent.

Not all organizations judge the essentiality of the patents through a qualifying process. Many SDOs list the essential patents based on the declaration of the patent owners. When we study the concept of essential patents, we come across various associated concepts like patent ambush, patent troll, marginal patents, useful patents and non-essential patents.

Standards can be a stumbling block

Standards are good for society for the purposes of compatibility and inter operability of components/devices and products. But, SEPs can also be a stumbling block to these aims if the patent owner refuses to license the subject matter technology of the SEPs and threatens to seek injunctions against the product manufactures whose products cannot be useful without adopting the subject matter technology. In such a scenario the option is to invoke the remedy under the antitrust & competition laws of the land, although this will only be possible in the case of undue dominance of the owner of the essential patent.

The necessity

Regular assessment of essentiality of a patent or a portfolio of patents has become a necessity for a company in the SEP prevalent telecommunications, ICT and consumer electronics sectors. For a summary of what the essentiality analysis should cover (see figure 2).

Essentiality analysis can be conducted for various reasons, such as freedom to operate, in licensing, out licensing, infringement monitoring and defensive invalidity and nullity proceedings. If a standard is evolved based on one or more patents, then the patent(s) are essential to that standard. And if a product is made in line with that standard then the patents is set to be infringed. In the case of invalidity/nullity proceedings, as a defense to the infringement case, the prior art search is required (see figure 3).

The two questions

While doing essentiality analysis to assess the infringement, one has to consider two questions:

1) Is the protected patent subject matter a must for the standard?

2) Are the features of the product in question read on the features of the said standard?

If the answer to the first question is “YES” then it is an essential patent and if the answer to the second is YES, then there is an infringement.

Claim charting is an important method to determine the essentiality of a patent, as well as to determine the infringement of a patent. It involves mapping each claim of the patent with all the specifications of the standard (see figure 4).

While compiling the claim chart, every care has to be taken to ensure that not only the enhanced/replaced standards are reviewed but also the previous versions of the standard. Further, all sections of the standard have to be reviewed thoroughly. The review will be cumbersome and may involve several hundreds of pages of review. It requires meticulous review of every claim of the patent with every section of the standard. On many occasions, more than one standard may be applicable for one claim. If the claims of the patent read on the sections of the standard, then the patent is an essential patent. Having done a claim chart of the claims of the patent with all sections of the standard, a claim chart of the patent with the features of the product is the next step to assess the infringement.

If the features of the product read on the claims of the patents, then the product is set to infringe the patent.

What matters most is not just the method of claim charting but the expertise in three areas, namely the patent analysis, product analysis and the standard analysis. The bottom line is the thorough understanding of the technology.

SEP is a strategic game

SEP is important for a company, for the reasons discussed previously. Creation, protection and commercialization of SEP is a strategic game. This game involves both proactive and reactive steps. Some proactive steps can be continuous monitoring of the activities in the SEP space, conducting Essentiality Analysis of the patent portfolio of competitors/target companies and carefully drafting the claims of the patent during prosecution, in line with the standards.

Not only is SEP a strategic game, but it is obvious that the SEP prevalent companies will continue to play the game.

Résumé

Raju Elangovan is the founder and the CEO of E-Merge tech, a premier, Patent, Technology and Competitive Intelligent services company. E-Merge tech provides a range of services within these three areas, to global customers.

Raju Elangovan has more than 25 years of experience in various functions including legal from different industries – Automotives, electrical, electronics, chemical, food processing and knowledge services. He held “C” level positions in knowledge services companies. He has a Degree in Life science, Degree in law, Masters in Human Resources Management and a Diploma in Training and Development. He has undergone specialized training in Six Sigma, ISO Lead Audit and TQM.

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